Engineering conglomerate Larsen & Toubro (L&T) reported a 14 per cent rise in its Ebitda for the September quarter at Rs 4,020 crore, on the back of better operational performance.
The company's profit before exceptional items was higher 7 per cent at Rs 3,302.75 crore, while profit before tax dipped 2 per cent year on year owing to an exceptional gain of Rs 294.75 crore in the corresponding quarter.
L&T's net profit rose 13 per cent to Rs 2,527.26 crore, higher form Rs 2,230.49 crore reported the same period a year ago. L&T's September quarter results are reflective of a new tax structure as well as consolidation of Mindtree's performance in its results. Net profit numbers also reflect share of profit from joint ventures and from discontinued operations including its electrical and automation (E&A) business.
Revenue from operations was at Rs 35,330 crore, 15 per cent higher from Rs 30,680 crore reported in the corresponding quarter. In a Bloomberg poll, 14 analysts estimated net income for the company at Rs 2146 crore and 16 analysts estimated revenue at Rs 35,434 crore.
With a revenue growth of 15 per cent and order inflow growth of 20 per cent, the company's management stated L&T's performance has been a contrarian to the state of the country's economy.
"It has been an extra ordinary quarter, lot of challenges. The economy showed more signs of growing slowdown, demand weakness was beginning to prevail over various sectors of the industry, lots of concerns around liquidity. The demand pull from borrowers and the lending push from the banks both were absent. Investments were lacklustre, the only investment that we witnessed was led by public sector utilities and the government," said R Shankar Raman, whole-time director and chief financial officer for L&T.
In its statement, L&T said the parent company and some of its subsidiaries have computed tax liability for the current year in accordance with the new provisions, applying the revised base rate of 22 per cent escalated by the applicable surcharge and cess.
Shankar Raman added the company has taken a one-time hit of Rs 400 crore, which is the net impact of a saving of Rs 400 crore and an outgo of Rs 800 crore owing to the adoption of the new tax structure. By the end of the year, it will be a net gain of Rs 200 crore," he added.
L&T's order inflow for the quarter under review was at Rs 48290 crore, 20 per cent higher from Rs 40320 crore a year ago. The management maintained its earlier guidance to end the year with a 10 per cent to 12 per cent year on year growth in order inflow. L&T's revenue guidance for the full year at 12 per cent to 15 per cent also remains unchanged. Domestic orders for the company took a hit, with a decline of 2 per cent, while international order doubled on a year on year basis.
The company's outstanding order book was at Rs 3.03 trillion, crossing the three trillion mark for the first time. Of these, 22 per cent orders are from the international market. Commenting on L&T's exposure to the Middle East market, SN Subrahmanyan, chief executive officer and managing director for the company added, "Right now, no (concerns on orders), but Middle East is a worry. There are issues and one needs to see how it plays out.” Less than 50 per cent of L&T’s international order book is exposed to the Middle East.
The company also indicated there is a slowdown in segments like infrastructure. Subrahmanyan added there is a slowdown in orders arising from commercial and real estate spends and the company has to depend on institutional orders in this sub-segment. "Orders in the road sector have also gone down; packages that are coming up are small. Orders from the dedicated freight corridors are also going down due to conclusion and the high speed corridor work is also not moving forward," he added.